House sellers’ asking prices surged by 8.9 per cent in the year to May, meaning the average home is now on sale at record high of £272,003, according to the latest data from a property website.

The annual growth crept closer to the 10.4 per cent seen in October 2007, while a month-on-month increase of 3.6 per cent - or £9,409 - was the highest ever seen for the time of year, according to Rightmove.

It says that across the country demand has remained strong but the supply of new properties to the market was still unable to keep pace.

Asking prices: After years of steady asking prices, the last 12 months have seen them rise dramatically

An increase in new sellers earlier in the year was reversed in May as the number of homes being newly put up for sale fell one per cent compared with April.

Miles Shipside, Rightmove director, said: 'The lack of fresh choice will frustrate buyers and lessen their negotiating power in popular locations as pent-up demand continues to be released.'

He
expressed particular concern about mortgages of more than four and a
half times a borrower’s salary which were widespread before the
financial crash of 2007 and now ‘creeping up’ again.

The
Governor is thought to be worried that Help to Buy – by sending a
message that houses can be bought with a deposit of as little as five
per cent – might encourage other homebuyers to borrow than they should.

Earlier
this month, the Bank's deputy governor Sir Jon Cunliffe warned surging
house prices could pose the biggest danger to the country's financial
stability and it was the brightest of the 'blinking warning lights' of
risk facing the UK.

Overall picture: This map shows the stark contrast in the asking price growth in the North compared with London

Meanwhile,
the Organisation for Economic Co-operation and Development has also
recently sounded a warning that action may be needed to cool the market,
calling for curbs on Help to Buy.

The Rightmove figures showed London led the way with a 16.3 per cent year-on-year increase, compared with a more modest 4.9 per cent rise in the rest of the country - suggesting that fears of a bubble were not borne out outside the capital, Rightmove said.

The average asking price in the city was up by nearly £80,000 so far in 2014, or £4,405 a week, compared with £1,521 a week for the rest of the country.

Ten out of
32 boroughs in London saw annual rises of more than 20 per cent, with a
43 per cent increase in Tower Hamlets driven by cash buyers and
investors in Canary Wharf and neighbouring areas.

Ben
Butler, sales manager of Morgan Randall in Canary Wharf, said: ‘A
number of areas of Tower Hamlets are investor territory, with a number
of cash buyers in the market and accidental landlords who have been
sitting on the side-lines since 2008 taking advantage of the buoyant
conditions and selling up.

‘Around 65 per cent of the properties we are selling are going to cash buyers, and we haven’t sold a property for under asking price since around August 2013.

‘As an example, one property sold in December 2013 for £425,000 and in March of this year an identical property in the same building sold for £575,000 - a £150,000 difference in just a few months.’

Property dip: The number of available homes slipped at the start of the year, but is slowly starting to regain momentum

Miles Shipside adds: ‘May is a traditionally bullish price rise month, though this year’s 3.6 per cent jump beats the previous May high of 3.2 per cent set in 2002.

‘A late Easter in the heart of the house-hunting season has not only concertinaed the traditional hottest home-moving period by several weeks, but also stagnated seller numbers, further stirring up prices in areas of buoyant demand.’

Demand for housing remains strong, with Rightmove revealing e-mail enquiries up by nearly 20 per cent so far in 2014 compared to the same period last year.